VC acceptable founder salary

[michaelmc]

Hi guys,

In your experience what would be an acceptable founder salary to VCs when investing in a start up?

Obviously I appreciate no VC wants to invest money to pay a founder salary but we all need to keep the lights on at home!

Just wondering what VCs would typically expect, is future salaries time driven ie no salary drawings for 6-12 months or tied to profitability targets etc.

Thanks

 

[ethical PR]

I would say you shouldn't be asking for a salary until your company generates enough to pay you one. Look at combining part time work, cutting expenditure, selling assets and using savings until you know the company is able to give you a salary after all other costs are accounted for.

You say we - how many founders are there?

 

[Clinton]

I was a guest at a Staddon Forbesdo in London last night where there were several investors, family office managers and VCs. The biggest moan the VCs had was about founder expectations.

...what would be an acceptable founder salary to VCs!

You want to know how much you can get away with. Wrong attitude, IMO. You come across as feeling "entitled". If you justify drawings based on your "needs" - whether it's to keep the lights on or pay for your annual skiing trip - you severely damage your chances of getting funding.

Ask for no wage (or a token payment for the work you're doing). The more skin you have in the game the more comfortable VCs feel with investing.

Stop thinking anybody owes you anything ...or that they care about your lights at home. Your business ain't making no profit. Why do you deserve payment?

 

[michaelmc]

Thanks for the replies.

My question was not one of entitlement although I can appreciate it coming across that way, I wouldn't waste time getting VC cash to draw it personally, the investment would wholly be for growth.

The question I posed was raised by the VC, he suggested it wasn't in the investors best interests to create hardship and lose focus or productivity and asked what my expectation would be, that's why I was wondering if there was a typical way of working this out.

 

[Clinton]

Maybe you got the one VC in the country who has a heart

Reply with the minimum figure you need to survive. Being able to live frugally is a good indicator of being able to run a lean startup. In fact, this could even be a "test".

 

[michaelmc]

I'm starting to think it may be....

Thanks for advice guys.

 

[qul]

Something like £2-5k/mth could potentially be reasonable but it depends on the level of investment and what the business needs to spend money on in order to succeed, quite often investors are paying for talent. What we've seen with our clients is that, at first, they might bootstrap, invest their own money or live off savings. But this can't last forever and many startups won't generate cash/profits for a long time, so once they receive investment founders will normally receive a salary.

 

[obscure]

As with any business (VC or self-funded) the answer is "the absolute minimum possible".

Sure you need to pay the rent but you don't need to keep the lights on - you will be at work 24/7. Your family won't need the lights on either, you sold them into slavery to raise money to put into the business yourself (last time I looked most VCs expect you to have skin in the game).